Doing business with DRC

Foreign Affairs Minister Stan Mudenge signed a memorandum of understanding on commerce, energy and mining with the Minister of Regional Cooperation for the Democratic Republic of Congo Mbusa Nyamwisi in 2004.

The MOU intended to improve road transportation between the two countries, harmonise their mineral exploration operations, and resolve a dispute over electrical power sold to Zimbabwe by DRC energy parastatal SNEL.

At the time Bindura Nickel Corporation chairman Kalaa Mpinga said his firm was finalising a joint venture agreement with Gecamines for a nickel production project in the DRC.

BNC was acquired Mwana Africa Holdings in 2003 and was listed on the Zimbabwe Stock Exchange.

Zimtrade, Zimbabwe’s trade promotion body, had abandoned its plans to construct warehousing facilities for Zimbabwean companies in the DRC.

Full cable:

Viewing cable 04KINSHASA1669, ECONOMIC REPORT – AUG 28 THROUGH SEPT 3

If you are new to these pages, please read an introduction on the structure of a cable as well as how to discuss them with others. See also the FAQs

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 02 KINSHASA 001669

SIPDIS

E.O. 12958: N/A

TAGS: EAID ECIN ECON EFIN EIND EINV EMIN ENRG ETRD CG

SUBJECT: ECONOMIC REPORT – AUG 28 THROUGH SEPT 3

¶1. Summary. Prices are stable with the exception of

food items, which registered a 7 percent increase.

Exchange rates remain stable. Adastra Minerals is

seeking to become a major metals producer in the

region. Bindura Nickel Corporation (BNC) and Gecamines

are in advanced negotiations for a joint nickel

production venture. The GDRC signed memoranda of

understanding with the governments of both Zimbabwe and

South Africa. The ICRC provided new pumps to Regideso

in Kisangani to ensure a supply of running water for

the city. The World Bank has approved the release of

USD 60 million for infrastructure and socio-economic

capacity building projects throughout the DRC.

MONETARY AND PRICE UPDATE

¶2. Prices remain stable aside from a significant

increase in food costs, which rose 7 percent for the

week ending on August 27. The cost increase may be due

to merchant price gouging in attempts to cover school

fees for the upcoming academic year. School fees

typically strain the budget of the average Congolese

household.

¶3. Exchange rates remain stable with bank rates

hovering at over FC 390 to 1 USD. Parallel market

rates remain within an FC 5 band above or below the

official rate. Rates in the eastern provinces remain

slightly elevated.

MINING

ADASTRA SEEKS TO EXPAND OPERATIONS, SIGNS WITH UMICORE

¶4. International press reported Adastra Minerals (aka

America Mineral Fields) COO Bernard Pryor as stating

that the company is seeking to become a major metals

producer in the region. The company has already signed

a joint venture agreement with Gecamines for a

copper/cobalt tailings project at Kolwezi, and recently

awarded the contract for the project feasibility study.

Adastra also reported that it has signed a long-term

supply agreement under which Umicore will purchase

cobalt to be produced from the Kolwezi project.

Additionally, Adastra is involved in a joint venture

with Gecamines to resume activity at the DRC’s Kipushi

zinc mine, which has been closed for a decade but could

be operational again by 2006. Adastra intends to

extract zinc from Kipushi for processing in South

Africa.

BNC AND GECAMINES IN ADVANCED NEGOTIATIONS

¶5. International press reported that Bindura Nickel

Corporation (BNC) chairman Kalaa Mpinga said his firm

is finalizing a joint venture agreement with Gecamines

for a nickel production project in the DRC. BNC was

acquired last year by Mwana Africa Holdings and is

listed on the Zimbabwe Stock Exchange.

FOREIGN INVESTMENT

ZIMTRADE ABANDONS WAREHOUSE PROJECT

¶6. Local press reported that Zimtrade, Zimbabwe’s

struggling parastatal trade promotion body, has

abandoned its plans to construct warehousing facilities

for Zimbabwean companies in the DRC. Several

Zimbabwean business ventures will reportedly be

jeopardized by the project’s cancellation.

ECONOMIC COOPERATION

DRC AND ZIMBABWE SIGN MEMORANDA OF UNDERSTANDING

¶7. International press reported that the DRC and Zambia

have signed several memoranda of understanding relating

to commerce, energy, and mining. DRC Minister of

Regional Cooperation Mbusa Nyamwisi signed the

agreements with Zimbabwean Foreign Minister Stan

Mudenge. Specifically, the memoranda are intended to

improve road transportation between the two countries,

harmonize their mineral exploration operations, and

resolve a dispute over electrical power sold to

Zimbabwe by DRC energy parastatal SNEL.

DRC AND SOUTH AFRICA TO INCREASE COOPERATION

¶8. As part of South African President Thabo Mbeki’s

attempts to safeguard the transition process in the

DRC, delegates from the two countries met during

Mbeki’s recent DRC visit to discuss matters of economic

cooperation. Press reported that the meetings resulted

in the signing of an agreement on health matters, a

memorandum of understanding on economic cooperation,

and an agreement for the reciprocal protection and

promotion of investment.

INFRASTRUCTURE

ICRC PROVIDES PUMPS TO REGIDESO IN KISANGANI

¶9. The ICRC has delivered ten pump units to Regideso in

Kisangani to replace failing pumps installed in 1982.

The pumps will be used to filter and chemically treat

Kisangani’s water supply. Installation of the pumps

will boost Regideso capacity and allow it to supply

nearly all of Kisangani’s 600,000 residents with

running water.

AID

WORLD BANK APPROVES USD 60 MILLION GRANT

¶10. The World Bank approved the release of USD 60

million to aid demobilization, social capital building,

and infrastructure-related projects in the DRC. The

money will be distributed to provincial and local

government agencies and NGOs.

¶11. INFLATION BY CATEGORY (IN PERCENT)

WEEK ENDING           8/6     8/13   8/20   8/27

FOOD                 -1     -2       0       7

BEVERAGE               0       0       0       0

NON-FOOD               0       0     -1       0

CLOTHING               0       0       0       0

RENT                   0       0       0       0

TRANSPORT             0       0       0       0

SCHOOL COSTS           0       0       0       0

UTILITIES             0       0       0       0

COMBINED FIGURES

WEEKLY INFLATION     -0.2   -0.6     0.0     2.6

MONTHLY INFLATION     -0.2   -0.8   -0.8     1.7

¶12. EXCHANGE RATE DEVELOPMENTS

8/6      8/13     8/20     8/27

CENTRAL BANK RATE 389.115 390.175 390.594 392.045

PARALLEL MARKET

-KINSHASA         385-390 385-390 385-390 390-395

-LUBUMBASHI       380-385 380-385 380-390 380-390

-MBUJI MAYI       380-385 385-390 385-390 385-395

-KISANGANI         375-385 375-385 380-390 380-390

-GOMA             400-410 400-410 400-410 400-410

-BUKAVU           400-410 400-410 400-410 400-410

MEECE

(39 VIEWS)